May 6, 2021

Greenhouse Gas Offset Credit System Regulations – GGC Submission

May 5, 2021

Jackie Mercer
Manager, Offsets and Emissions Trading Section Carbon Markets Bureau Environment and Climate Change Canada
351, boulevard Saint-Joseph, Gatineau (Québec) K1A 0H3

Via email: ec.creditscompensatoires-offsets.ec@canada.ca


Re: Canada Gazette, Part I, Volume 155, Number 10: Greenhouse Gas Offset Credit System Regulations


Dear Ms. Mercer,

On behalf of grain, pulse and oilseed growers across Canada, we appreciate the opportunity to provide feedback on the proposed Greenhouse Gas Offset Credit System Regulations (the regulations). As an industry, we appreciate the government recognizing that Canadian farmers want to be a part of the climate change solution. We believe if the regulations are implemented effectively, farms across Canada are willing to engage in projects that lead to reductions in GHG emissions or increases in GHG removals from the atmosphere by carbon sinks.

In order to ensure participation of farmers, the entire system, from application requirements to reporting, monitoring, record keeping and verification, must all be as simplified and streamlined as possible. While we understand the need for accurate reporting to ensure the credits created are legitimate and impactful, for a series of small-scale projects such as is expected under the enhanced soil organic carbon protocol, the efforts for farmers involvement must not be too onerous as to limit uptake.

We expect that under the enhanced soil organic carbon protocol, much like in the case of the Alberta Conservation Cropping Protocol, for most farmers, aggregators will facilitate much of the management of all aspects of the credit development. Under this scenario, we would anticipate that the aggregator will seek to reduce the onus on the farmer applicant significantly, but it remains important that the Greenhouse Gas Offset Credit System Regulations do not create undue requirements that will dissuade farmers for participating, and from Canada realizing the benefits of increased carbon sequestration.

Having sequestered millions of tonnes of carbon, it is important to recognize the contribution of Canadian farmers in meeting Canada’s climate change goals and provide them with a meaningful path to participate in the output-based pricing system (OBPS). Farmers have an inelastic demand curve for carbon-based inputs. Ensuring access to a variety of offset protocols that are transparent and relevant will benefit both farmers and the environment.

Offsets need to be clear, practical and accessible. To avoid carbon leakage, where revenues are to be returned to industry, effective carbon pricing policy should ensure that revenues are returned to the sector from which they are collected. When considering the implementation of such a policy, we would recommend providing an exemption from all aspects of the price on carbon as it relates to primary agricultural production in Canada.

While we appreciate the department’s regulated offset market development process, we are very concerned that opportunities for a liquid regulated offset market are diminishing with every year. In order to achieve maximum economic efficiency in the regulated offset market, for both obligated parties, offset proponents, and project participants, the regulated market must be developed as soon as possible.

The longer that Canadian farmers are left without a meaningful path to participate in the regulated market, it is increasingly likely that they will seek out voluntary market opportunities. We urge you to prioritize the development and implementation of an agricultural soil organic carbon offset protocol as well as a fertilizer emissions reduction protocol based on 4R nutrient stewardship practices. This will provide liquidity in the regulated offset market, reduce compliance costs for obligated parties, decrease regulatory burden on government, and provide meaningful opportunities for Canadian farmers to participate in the OBPS.

Eligibility Criteria For decades, Canadian farmers have been increasingly adopting tillage practices that sequester carbon, and deserve recognition for those efforts. As it currently stands, OBPS participants will not be able to trade the significant amounts of carbon that have been stored in Canada’s agricultural soils for decades. By setting a baseline of year of 2017, farmers who were pioneers in soil conservation and early adopters of minimal tillage or low-soil disturbance cropping systems are now being penalized for it.

Excluding otherwise eligible activities based on arbitrary timelines could have the unintended consequence of actually reversing carbon sinks, in an effort to adjust baselines to conform with shifting policy timelines. To avoid these perverse effects stemming from the current timelines, we recommend the regulations be amended to push the baseline year backwards to ensure those early adopters are included without considering practice changes that reverse sequestration gains, in order to be eligible for credit creation.

Crediting Periods, Duration at s 7(1)(ii)
It is accepted that the climate change potential of greenhouse gases is at issue for 100 years. This science is what understandably informs the 100-year permanence requirement for sequestration offset protocols and projects. However, to ensure that unintentional reversals do not take place, we would recommend the confirmation that crediting periods could be extended to 100 years for non-forestry related sequestration projects. In addition to this, we would propose that language be crafted to allow project developers and participants flexibility in determining the crediting period for each specific project. Providing this flexibility in the regulations will provide sufficient insurance against the unlikely possibility of unintentional reversals.

Monitoring Reports, Risk Management Plan Implementation at ss 27(2) and 28 In order to streamline reporting processes and reduce compliance burdens, we would recommend that when considering monitoring reports for sequestration projects at s 27(2), that the monitoring report be required to be submitted 100 years after the end of the first credited year of the offset project, instead of 100 years after the end of the crediting period for the project.

Similarly, we would recommend that when considering the implementation of a risk management plan for biological sequestration projects, that the plan be required only until the end of the 100 years after the end of the first credited year of the project, instead of 100 years after the end of the crediting period for the project.

In addition to streamlining requirements for reporting and risk management plans, we would suggest the implementation of a randomized audit process in lieu of requiring site visits for all project participants to further reduce compliance burdens for both of these requirements. Furthermore, allowing for the integration of new technologies into these verification procedures, as they may become available will have a similarly positive effect.

Conclusion
Grain growers support the use of consistent offset protocols across the country as well as cross compliance mechanisms to acquire and trade credits. Consistent offset protocols and cross compliance mechanisms will encourage participation, reduce the cost of compliance, and facilitate transparency in the Canadian offset market.

Thank you for considering this submission. Agriculture is an important contributor to the Canadian economy, and farmers are amongst the best stewards of the environment. We are committed to working with you to ensure our industry remains competitive while endeavouring to achieve the climate goals set by the government.

Please feel free to contact us if you require additional information.

Sincerely,



Andre Harpe, Chair Grain Growers of Canada

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